UGR Montney Presentation Calgary, Alberta September 16, 2014 Confidential and Proprietary 1
Montney Overview WHY SHOULD YOU CARE WHO IS UGR The Montney is a BIG Play UGR Blair Creek Ltd. Oil & gas in place Marcellus and Eagle Ford Private company with 27 Tcf in place in Montney combined In North Montney sweet spot 2.8…
Montney is a World-Class Play Over 4,200 Tcf and 140 billion bbl oil in place From Canadian National Energy Board (NEB) UGR Lands Greater than the Marcellus and Eagle Ford combined 449 Tcf gas recoverable 14.5 billion bbl NGLs…
Montney Began as a Conventional Play Three main types of deposits in the Montney Shoreline and shelf deposits comprising sandstones, siltstones and coquinas, with conventional high permeability oil and gas reservoirs exploited in the…
Montney is a THICK Formation Courtesy of Progress Energy 1,000 foot thick formation = 3+ stacked plays OGIP = 250+ Bcf/sq. mile vs. 150 Bcf/sq. mile for Eagle Ford Montney thins to the East, Upper Montney is not Present in…
Montney Production is Ramping Up Gas Production Oil Production The Montney is following a similar path as the early delineation and development of the Eagle Ford and the Marcellus Confidential and Proprietary 6
Montney Wells Have Shallow Decline Rates Why shallow Montney decline rates Probably due to enhanced permeability due to natural fracturing in low-porosity areas Some areas have better Production Curves permeability due to…
Montney Industry Trends Drilling Completions Surface casing setting depth reduced from 2,000 Open hole ball drop emerging as preferred to plug feet to 1,000 feet & perf Saves about US100,000/well Saves 500,000/well Drill & set…
Completion Technology is Evolving Costs coming down, wells getting better Multi-Well Pads 4 to 8 wells/section 12 to 32 wells/pad Frac Design Optimization Ongoing Still timid designs by U.S. standards 4,500 foot to 10,000 foot…
Competitive Insights Ownership Product Prices Provinces own the vast majority of mineral rights Gas prices tend to trade at 90% of Henry Hub, but basis is volatile Leases obtained through monthly sealed-bid Oil trades at a 10%…
BC Montney M&A Activity BC Montney 2010 2013 British Columbia Montney M&A Activity 8 acquisitions: US8.1 billion US2,000 - US34,000 per acre (avg. US8,200) Some with production, some without At a discount to JVs 5 JVs: US6.5…
LNG Highlights Proposed Western Canadian LNG Plants and Pipelines 16 LNG export projects proposed, 6 by majors with experience, 2 by credible small players; 6 new pipelines proposed Over 35 Bcf/D if all constructed, 2 x historic…
UGR Montney Assets Confidential and Proprietary 13
UGR Lands are in the Heart of the North Montney Fairway UGR has 70,000 net acres, most with a 100% The North Montney was initially drilled in 2009 and working interest now has 32 rigs running in the local UGR area (Progress is…
UGR Acreage is in a Large Sweet Spot Best Month of Production (BC Montney) Best Month of Production (North Montney) Alberta Border UGR lands Confidential and Proprietary 15
The North Montney Has Thick Quality Acreage High-Graded Pay Thickness (BC Montney) Gas In Place per Square Mile (North Montney) Confidential and Proprietary 16
UGR Acreage has Good Wells In All Three Montney Zones North Montney Well Quality and Completion Zone Good wells in all three zones Over-pressured (0.5 to 0.65 psi/ft) Dry gas wells are deeper, higher pressure, higher rate Formation…
UGR Wells are Better Than Play Average, Revisions are Usually Upwards UGR Wells are Significantly Better than the Play Average Two of the top ten wells in the BC Montney Unconventional play are on UGR lands (based on 6-month…
Marketing Regional Pipe and Takeaway Capacity North Montney Existing and Planned Pipelines The UGR lands sit on an existing 1.8 Bcf/D pipeline (Spectra T-North) Fully contracted, but 700 MMcf/D underutilized UGR has 90 MMcf/D of firm…
Consolidation Opportunities Land Position by Company in North Montney Obvious local consolidation candidates are Painted Pony (public), Black Swan (private), Saguaro (private), Carmel Bay (private) and Canbriam (private) It is…
UGR Montney Reserves Growth Roughly 67% of UGRs locations have been booked as either Reserves or Contingent Resource Bookings occur when production has been proven within 3 miles of a location (zone by zone) When all acreage has…
UGR Initial Development Plan UGR initiated a continuous drilling plan in December 2013 to drill wells on our 100% working interest lands. Drill 31 net wells in 2.5 years A second rig will be contracted in 2015 We have 2 years of…
UGR Drill-Out Potential Drill-Out Plans for 1,500 Wells Are Being Developed Ramp to 10 rigs = 1 Bcfe/D by 2022, can hold flat for 10 years Drill-Out Cash Flow Self-Funding by year 3 without using debt 550 million required to reach…
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